Ashley's Sports Direct drops plan to buy Debenhams

Ashley's Sports Direct drops plan to buy Debenhams

The Debenhams store at Westwood Cross could be at risk after the company rejected a £300million conditional offer from Sports Direct boss Mike Ashley to bail it out.

Administrators at FTI Consulting were appointed to the retailer at just before 10am today and immediately sold the group's operating companies to a new entity owned by its lenders. They sold the group to its creditors including British banks and US hedge funds.

This morning, the company turned down a £200million offer by Sports Direct's Mike Ashley, on the condition he became CEO.

The restructuring will be brought about through a Company Voluntary Arrangement (CVA), which have been favoured in recent years as shops close stores.

Hargreaves Lansdown analyst Laith Khalaf said it had been downhill for the group since it floated on the stock market - for the third time - in 2006.

Debenhams chairman Terry Duddy said: "It is disappointing to reach a conclusion that will result in no value for our equity holders".

Debenhams, which has 166 stores employing about 25,000 staff, will continue to trade, although about 50 branches are earmarked for closure in the future.

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Seoparately Ashley's firm also made a decision to abandon a proposal to acquire Debenhams for 5p per share or £61m.

But he said it would allow Debenhams to continue trading as normal, access new funding and carry out its turnaround plans, while reducing debt.

It follows Mr Ashley's successive bids to take over the business were rejected.

He added: "While there may be some short term cost to Sports Direct and our shareholders, sometimes you have to do the right thing, something the board of Debenhams and the hedge funds have manifestly failed to do".

'We remain focused on protecting as many stores and jobs as possible, consistent with establishing a sustainable store portfolio in line with our previous guidance.

Tuesday's deal will keep Debenhams' 166 United Kingdom stores trading for the time being, administrators from FTI Consulting said.

'In the meantime, our customers, colleagues, pension holders, suppliers and landlords can be reassured that Debenhams will now be able to move forward on a stable footing.

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